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It is typical for lawyers and consultants practicing in the United States to view the world through the prism of their experiences in the United States. There is a tendency to see evolution of the law in other countries in terms of how it matches up with what is happening in the U.S. For example, in the antitrust arena, not that many years ago when people talked about harmonization of antitrust laws and enforcement regimes between the United States and Europe, they spoke in terms of how long it would take for Europe to adopt the U.S. model. We know now, of course, that harmonization means something very different and, perhaps, the real question is how rapidly the U.S. enforcement model will move toward Europe’s.

With that experience in mind, it is interesting to cast an eye beyond Europe to Asia, where new competition regimes are emerging and existing enforcement structures are finding new teeth—and new targets. If there is a lesson to be learned from the U.S. experience with antitrust colleagues at the European Commission (EC) in Brussels and Europe, it is that the Asian competition models will neither be clones of the United States nor European models. In fact, the emerging competition policy regimes we see in Asia reflect law, culture and values unique to each jurisdiction. For that reason, it is useful to review some of the major antitrust initiatives taking place in Asia, to try to understand what they mean for companies in the rest of the world that are active in Asian markets.

Antitrust enforcement in Asia is, of course, not new. There have been enforcement regimes in Japan, South Korea and other nations for many years. For a long time they were seen as relatively weak, focused on institutionalizing protectionist behavior and of little real consequence to Western-based businesses. That is surely no longer the case. Where previously a merger between U.S.-based firms might have implicated only United States and European antitrust laws, such a transaction will be analyzed in jurisdictions around the world, especially in places like the People’s Republic of China (China or PRC), Australia and India. Cartel activity that would have been challenged aggressively in the United States and Europe is now challenged aggressively and cooperatively by antitrust enforcers in the U.S., Europe and throughout Asia.

As a result, it is critical to understand, at a high level at least, what the laws and enforcement mechanisms pose and how they are developing. While a complete review of Asian competition policy enforcement is a worthwhile subject, in this discussion I focus on four jurisdictions: Australia (which has an active, aggressive and mature antitrust enforcement agency), South Korea (which has had an active enforcement regime for many years), China (which adopted and began enforcing antitrust laws only in the last five years, and Hong Kong (which has a new competition ordinance and where enforcement is likely to begin next year).

AustraliaIn Australia, antitrust enforcement is the province of the Australian Competition and Consumer Commission (ACCC). The ACCC has been, arguably, the most active enforcement agency in the Asia-Pacific region for many years. It has been vigorous in investigating mergers that implicate competition in Australia, and it continues to be aggressive in challenging mergers that it views as anticompetitive.

The ACCC has also taken on a leading role in cross-border cartel investigations and has established itself as an equal enforcement partner to the United States and European Commission (EC). A prime example of this is the role taken by the ACCC in connection with the recent air cargo cartel investigation. In that case the ACCC, in conjunction with antitrust enforcers around the world, vigorously investigated and prosecuted the cartel participants. The ACCC has been similarly vigorous in pursuing investigations into the alleged abuse of market power and in the consumer protection area.

While it would be easy to surmise that emerging regimes in the region will be modeled on either the U.S. enforcement model or that of the European Commission, it is plausible, if not likely, that some countries will follow the lead of Australia. The ACCC has established a reputation as a careful and thorough enforcer, relying on sophisticated legal and economic analysis. Aside from casting a wide net with its own enforcement activities, the ACCC offers a credible enforcement model for other enforcement regimes.

South KoreaIn South Korea, enforcement is active. While an ongoing focus for the Korean Fair Trade Commission (KFTC) has been cartel investigations, recent amendments to the competition policy laws suggest a likely increase in criminal complaints. The KFTC is a vocal presence in Korea. Its leadership is active in promoting its role in fostering fair competition and in pushing for legislative amendments to the current competition laws.[1] Indeed, there have been several amendments passed in the last year to the Fair Trade Laws, most of which will become effective this year.

Of particular interest now is the extent of the KFTC’s recent activity in analyzing so-called fair, reasonable and non-discriminatory (FRAND) licensing requirements that are imposed on firms with so-called standard-essential patents (SEPs). In a recent decision, the KFTC determined that Samsung did not violate its FRAND obligations on claimed SEPs, a decision that was at odds with those in other jurisdictions. [2] With ongoing disputes in the mobile device sector involving alleged patent infringement and abuse of the standard setting process, it is likely that investigations and decisions by enforcers such as the KFTC will garner increasing attention.

People’s Republic of ChinaThe anti-monopoly law (AML) that governs competition policy enforcement in the PRC went into effect in 2008. While not as old or established as some Asian antitrust enforcement regimes, the AML is a key statute, and China’s growing importance as a commercial and industrial power mandates an understanding of and compliance with the Chinese law. Enforcement authority in China is vested in three agencies: The Ministry of Commerce (MOFCOM) is responsible for merger review, the National Development and Reform Commission (NDRC) investigates allegations related to pricing, and the State Administration for Industry and Commerce (SAIC) handles non-price matters.

Of these agencies, MOFCOM is best known and its enforcement activities have been most visible. Since 2008, the number of transactions notified to MOFCOM has increased more than twelvefold and, more important, the number of instances in which MOFCOM has adopted positions at odds with its enforcement brethren has increased markedly. Indeed, it is striking that MOFCOM has shown a distinct willingness to demand remedies from merging parties in cases that have been cleared elsewhere or to insist on changes beyond what other enforcement agencies have demanded. This trend is likely to continue. If it is true that global antitrust standards are driven by the most active antitrust enforcement regimes, it seems likely that MOFCOM will be an increasingly important driver in setting global antitrust standards.

In a recent decision, MOFCOM cleared—with conditions—the proposed acquisition by Fisher Thermo Scientific of Life Technologies. What is especially interesting is that the MOFCOM-imposed conditions for clearance were importantly different from those in the European Union (which also provided conditional compliance). This is noteworthy because, first, it indicates the willingness of MOFCOM to carve its own path in demanding remedies that respond to conditions in the PRC and, second, it highlights the role that China can play in imposing remedies for non-Chinese firms with notification obligations in China that go beyond what are imposed in jurisdictions such as the European Union and the United States. In planning for possible enforcement consequences in different jurisdictions, merging parties ignore China at their peril.

Notwithstanding their less visible public role in antitrust enforcement than that of MOFCOM, the NDRC and SAIC are significant enforcement agencies in their own right.[3] While the seemingly artificial line-drawing that resulted in each agency’s unique focus raises some interesting jurisdictional questions (e.g., who investigates allegations of non-price and price-related behavior?), the key take-aways from an analysis of the two agencies’ recent activities are that: (1) their investigations, especially on the cartel front, are well coordinated with other enforcement jurisdictions; (2) the scope of their investigative activities is expanding; and (3) these agencies have matured such that they are increasingly comfortable in blazing their own path, in terms of the breadth of issues they investigate and the scope of remedies they impose.

Hong KongThe antitrust newcomer in Asia is Hong Kong. A new competition ordinance was passed in June 2012 and, while the enforcement guidelines have not yet been circulated for comment, there is a general expectation that the enforcement regime will be meaningful and that Hong Kong will emerge as a significant and substantive player in antitrust enforcement in Asia and the rest of the world.

The Ordinance contains prohibitions on restrictive arrangements and concerted behavior (e.g., cartels and, presumably, arrangements that allocate markets or otherwise limit the scope of horizontal competition). It also bars any abuse of substantial market power (with the operational definitions still to come) and bans mergers that are anticompetitive in the telecommunications sector. The anti-merger provisions do not extend beyond telecom; however, it is easy to imagine that these restraints will ultimately be extended to other sectors.

As of now, it is difficult to predict with certainty how enforcement in Hong Kong will manifest itself. Until the enforcement guidelines are drafted and presented, any predictions about enforcement standards, the transparency of the enforcement process, and the initial aggressiveness of the enforcers are merely educated guesses. However, two conclusions seem warranted. First, this is likely to be a substantive antitrust enforcement regime that will require substantial legal and economic work. Second, its importance will likely grow over time as enforcement officials move up their learning curve and as enforcement standards and legal precedents are better established.

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Antitrust enforcement standards are set by the most active enforcers. The center of enforcement—which at one time was clearly the United States—has shifted more and more to Brussels as the EC has flexed its enforcement muscles. It is surely fair to say that there are two reference points now. But, a third focal point is likely to emerge in Asia. There is no reason to believe that European antitrust enforcement will slacken, and whereas enforcement activity in the United States does wax and wane, increasingly vigorous enforcement in Asia is a certainty. Any business whose activities touch on Asian commercial centers needs to pay attention to Asia’s emerging regimes. Managing the demands of diverse laws will be a challenge, and the costs of ignoring them will be high. Attention to the legal requirements imposed by these statutes and an understanding of the legal and economic analyses that will be required to defend behaviors in these countries is—and will remain—essential.